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Materials stocks that are worth a second look

Scott Adams
July 11, 2009
The Globe and Mail

WHAT ARE WE LOOKING FOR?

A ranking of Canadian materials stocks that should do well in July.

REVIEW OF JUNE RECOMMENDATION

Yin Luo, quantitative strategist at Macquarie Securities, recommends a portfolio strategy each month for this column. In June, he ranked Canadian energy stocks. The 10 top-ranked stocks returned 5.5 per cent, while the bottom 10 fell 1.4 per cent. So, his strategy generated a spread of 6.9 per cent. Since contributing to the column, his strategy has outperformed the benchmark 19 out of 25 months.

THEME FOR THIS MONTH...

Mr. Luo has found that picking stocks based on cheap valuations has worked well recently, including in June, while trend-following strategies (such as price momentum and analyst sentiment-based factors) underperform. But large-cap and low-beta stocks started to recover last month, which suggests that trend-following strategies may turn the corner soon.

"In reaction to the current environment, we propose a more balanced approach by ranking the Canadian materials stocks based on valuation, analyst sentiment, and liquidity," Mr. Luo said. "Value style is likely to continue to survive, while improvement in liquidity profile tends to be a good defensive strategy. Analyst revision factors have a great long-term track record in Canada."

Ranking Canadian Materials Stocks



Rank Company name Ticker Market Cap ($ Mlns) Average Daily Volume
1 Semafo Inc. SMF-T 523.6 1,277,600
2 Migao Corporation MGO-T 216.1 203,700
3 Inmet Mining Corp. IMN-T 1,796.4 519,700
4 CCL Industries Inc., B CCL.B-T 577.3 62,600
5 Centamin Egypt Limited CEE-T 1,396.5 3,194,200
6 Teck Resources Limited TCK.B-T 8,935.9 11,898,800
7 Quadra Mining Ltd. QUA-T 893.0 1,509,500
8 New Gold Inc. NGD-T 1,152.4 2,491,400
9 Gerdau Ameristeel GNA-T 1,139.5 892,800
10 Western Canadian Coal WTN-T 269.3 3,677,600
11 Int'l Royalty Corp IRC-T 249.2 223,900
12 Mercator Minerals Ltd. ML-T 204.7 5,045,700
13 Hanfeng Evergreen Inc. HF-T 219.5 181,200
14 Gabriel Resources Ltd. GBU-T 379.5 495,500
15 Harry Winston Diamond HW-T 441.9 532,600
16 Sino-Forest Corp. TRE-T 2,837.2 756,400
17 Methanex Corporation MX-T 1,325.4 685,700
18 Major Drilling Grp Intl MDI-T 454.0 170,500
19 Centerra Gold Inc. CG-T 365.3 302,800
20 Sherritt Int'l. Inc. S-T 1,523.9 3,010,100
21 First Quantum Minerals FM-T 4,345.1 842,400
22 Royal Gold Inc. RGL-T 1,830.4 6,300
23 Barrick Gold Corp ABX-T 35,244.8 4,331,700
24 Silvercorp Metals Inc. SVM-T 685.1 743,900
25 Thompson Creek Metals TCM-T 1,500.5 1,556,800
26 Equinox Minerals Ltd. EQN-T 1,708.7 4,442,500
27 Cascades Inc. CAS-T 319.7 458,200
28 HudBay Minerals Inc. HBM-T 1,189.1 1,850,200
29 Lake Shore Gold Corp. LSG-T 352.1 691,400
30 Silver Wheaton Corp. SLW-T 3,052.4 1,961,900
31 Red Back Mining Inc. RBI-T 2,118.6 1,960,100
32 Potash Corp. of Sask. POT-T 32,596.3 1,386,100
33 Lundin Mining Corp. LUN-T 1,746.6 7,948,000
34 Minefinders Corp. MFL-T 485.9 259,200
35 Taseko Mines Ltd. TKO-T 344.7 841,300
36 Northgate Minerals NGX-T 670.3 552,600
37 Fronteer Development FRG-T 479.1 440,500
38 Gammon Gold Inc. GAM-T 999.3 563,400
39 Alamos Gold Inc. AGI-T 1,040.8 635,500
40 Corriente Resources Inc CTQ-T 447.4 302,900
41 West Fraser Timber Co. WFT-T 728.3 75,500
42 Capstone Mining Corp. CS-T 493.7 2,144,400
43 Canfor Corp. CFP-T 464.8 215,000
44 FNX Mining Company Inc. FNX-T 718.2 1,324,100
45 Agrium Inc. AGU-T 7,471.6 1,174,300
46 Eldorado Gold Corp. ELD-T 4,036.3 3,006,000
47 Franco-Nevada Corp. FNV-T 2,830.5 751,900
48 Kinross Gold Corp. K-T 15,031.6 4,062,000
49 Golden Star Resources GSC-T 564.1 526,500
50 Osisko Mining Corp. OSK-T 1,402.9 1,874,800
51 Kirkland Lake Gold Inc. KGI-T 519.3 92,900
52 MAG Silver Corp. MAG-T 248.2 74,700
53 Iamgold Corporation IMG-T 4,322.7 2,541,300
54 Detour Gold Corp. DGC-T 483.5 313,200
55 Canam Group Inc. CAM-T 247.0 43,500
56 Goldcorp Inc. G-T 30,558.0 3,487,000
57 Agnico-Eagle Mines Ltd. AEM-T 9,812.3 1,055,800
58 Yamana Gold Inc. YRI-T 7,776.5 6,493,800
59 Pan American Silver PAA-T 1,871.1 181,200
60 Ivanhoe Mines Ltd. IVN-T 1,758.7 1,093,000
61 Aurizon Mines Ltd. ARZ-T 677.1 833,800
62 Int'l Minerals Corp. IMZ-T 307.8 35,400
63 NovaGold Resources NG-T 680.3 596,300
10-Jul-09
Source: Macquarie North American Quantitative Research




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